The brother of the killer who stabbed cafe owner Sisto Malaspina on Melbourne's Bourke Street has admitted to trying to buy a gun to prepare for a terrorist attack.

Key points:

Ali Khalif Shire Ali was due to face a jury trial before his guilty plea and will return to court in August

The court heard the attack was designed to "advance the cause of Islam through violence"

He is the brother of Hassan Khalif Shire Ali, who was shot dead in last year's Bourke St attack

Ali Khalif Shire Ali, 22, on Wednesday appeared in the Supreme Court to plead guilty to making inquiries about gaining access to a firearm and ammunition in preparation for or planning a terrorist attack.

The court heard the attack was planned to take place in Federation Square in late 2017 to "advance the cause of Islam through violence".

Person of interest

At the time of Ali Khalif Shire Ali's arrest, police said they believed he was trying to get an automatic rifle to "shoot and kill as many people as he could" around Federation Square, in Melbourne's CBD during New Year's Eve celebrations.

Federation Square is one of the most popular spots in Melbourne to bring in the new year.

He had been monitored by police, who said at the time that they made the arrest because he had been having face-to-face meetings about getting a gun.